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23. The petitioners are "Directors" of the Company, however, no averment has been made in the complaints regarding "Consent", "Connivance" or "negligence" as required under Section 278B (2) of the I.T Act.

24. Now, the scope of section 276B (as amended by the Finance Act, 1997) will have to be understood in its correct perspective.

9 of 42 WP-3039-2022.doc This Section covers cases of "Failure to Pay" and not mere "Delay in Deposit" of TDS". In Pre-1997 unamended provisions, the words "as required by or under the provisions of Chapter XVII-B" could be read along with the words "BOTH". Under the amended provisions (post 1997), the criminal liability, however, is attracted on "Failure to Pay". The phrase "as required by or under the provisions of Chapter XVII-B" is separately mentioned in Clause (a) of Section 276B and hence, is linked only with and explains the manner in which tax is required to be deducted and not the manner of payment thereof. Thus, under the amended provisions, in case TDS has been paid in full, even with some delay, Section 276B would not be attracted.

29. Let me now first look into the judgment delivered by the High Court of Jharkhand at Ranchi in case of M/s. Dev Prabha Construction Private Limited Vs. The State of Jharkhand and another2 wherein while deciding a bunch of petitions, the learned Judge has discussed scope of section 276B of the I.T Act in respect of quashing of the cognizance taken by the Special Judge of the Economic Offence, Dhabad, by which cognizance has been taken against the petitioner for the offences under section 276B of the I.T Act. It would be apposite to extract paragraphs 15 to 19 of the judgment;

32. Before considering judicial analysis made in case of Bee Gee Motors & Tractors and another Vs. Income Tax Officer 4, it would be expedient to refer to CBDT Circular bearing F. No.255/339/79- IT (Inv.) dated 28th May, 1980 in this context. Section 276B deals with prosecution for failure to pay tax deducted at source. 3 [2017] 396 ITR 636 (Patna) 4 [1996] 218 ITR 155 (Punj. & Har.), 157-158 18 of 42 WP-3039-2022.doc Prosecution under section 276B should not normally be proposed when the amount involved and/or the period of default is not substantial and the amount in default has also been deposited in the meantime to the credit of the Government. No such situation will, of course, apply to levy of interest under Section 201 (1A) of the I.T Act. In Bee Gee Motors & Tractors Vs. Income Tax Officer (supra), it has been observed at pages 157 to 158 and I quote;

34. In case of Sree Metaliks Ltd. Vs. Union of India (supra), the petitioner was being prosecuted in view of Section 276B r/w Section 278B and 279 of the I.T Act on the basis of failure to pay tax on distributing profits of domestic companies/deducted at source for the Assessment Year 2021-21. The assessee failed to deposit TDS amount for financial year 2019-20 within statutory period, leading to complaint case under Sections 276B and 278B. Despite specifically depositing TDS amount with interest, prosecution was sanctioned under Section 279 (1) of the I.T Act. The assessee had explained that the delay was due to factors like market sluggishness, insolvency proceedings and COVID-19 pandemic with no mens rea 21 of 42 WP-3039-2022.doc involved. It is held that the Authorities ought to have taken into consideration explanation offered by assessee, particularly for the reasons that the Company had suffered insolvency and bankruptcy proceedings and restrictions imposed during COVID-19 Pandemic. Since the prosecution had been initiated by the Revenue after having received TDS amount along with interest, it is held that in such circumstances, entire proceeding initiated against the assessee was to be quashed.